Economy will soon return to 9% growth path, says Pranab

Each country has to chart its own regulatory path'.

New Delhi: The Finance Minister, Mr Pranab Mukherjee, sees strong prospects for the Indian economy getting back, in the short term, to the nine per cent average economic growth level witnessed prior to the global economic crisis of 2008.

This expectation stems from the revival in investment and private consumption demand, impressive growth in merchandise exports since November-December 2009, favourable capital market conditions and improvement in capital flows besides manufacturing sector buoyancy reminiscent of the pre-slowdown years.

Addressing the India Economic Summit (IES) 2010 in the Capital today, Mr Mukherjee also came up with an encouraging outlook for the Indian economy in the medium to long run. He expressed confidence that the current high economic growth would be sustained in the coming decades as advantages like demographic dividend starts paying off.

The challenge now is to find the means to cross the ‘double digit growth barrier' in the coming year or two, he noted.

“We are seeking to make growth more broad-based and ensure that supply demand imbalances are better managed.”

Mr Mukherjee also told the IES, comprised largely of foreign investors, that the Government was striving to improve the regulatory environment in the country.

“As you know there are no off-the-shelf solutions available to the regulatory dilemmas facing any developing country. Each country has to chart its own path on the regulatory reform based on its native genius and the conditions on the ground. India too is striving to achieve the optimum path,” he said.

Financial stability council

On financial sector reforms, Mr Mukherjee said that India has decided to set up an apex-level financial stability and development council (FSDC), with a view to strengthen and institutionalise the mechanism for maintaining financial stability.

“This council would undertake macro prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination issues. It would also focus on financial literacy and financial inclusion,” he added.

The Government has also decided to set-up a financial sector legislative reforms commission (FSLRC) to rewrite and clean up the financial sector laws and bring them in line with the requirements of the sector, Mr Mukherjee said.

India's gross domestic product (GDP) growth had averaged close to nine per cent in the four-year period from 2004-05 to 2007-08.

Due to the global economic slowdown, the GDP growth declined to an average of seven per cent in 2008-09 and 2009-10.